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For next week:

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Economic growth has flatlined so far this year. Inflation has picked up. And consumers expect both to get worse in the months ahead, Axios chief economic correspondent Neil Irwin writes.

• Why it matters: For the moment, it adds up to Wall Street's least-favorite "s-word," stagflation — stagnant growth mixed with elevated inflation.

[ATTACH=full]196485[/ATTACH] That pattern, most vividly seen in the 1970s, is particularly painful because it means people experience pain from both lack of job opportunities and higher prices.

• It also leaves the Fed and other economic policymakers with less ability to cushion the blow because a move that might address one side of the problem could worsen the other.

The takeaway, from a slew of recent data, is that President Trump inherited a shakier economy than it seemed and is risking something worse with aggressive policy moves.

[ATTACH=full]196486[/ATTACH] State of play: The backward-looking data lately has been distinctly stagflationary. Consumer spending in the first two months of 2025 has been soft, coming in 0.6% below its December rate (when adjusted for inflation).

• A real-time estimate of GDP published by the Atlanta Fed is now pointing to economic activity shrinking by 0.5% in Q1, which ends Monday (after adjusting for gold inflows that distort economic data).
• Meanwhile, the inflation measure favored by the Fed has risen at a 4.1% annual rate in the first two months of 2025, the highest in a year.
• That all helps explain why, following a steep selloff Friday, the S&P 500 is now 9% below its Feb. 19 high.

[ATTACH=full]196487[/ATTACH] Reality check: The GDP number appears to be depressed by a one-time surge of imports as companies try to get ahead of tariffs. Inflation has been on a bumpy path for years.

• Key measures of the job market have held up fine.

But when it comes to what will happen next, Americans have become more downbeat on both the outlook for jobs and inflation.

• The University of Michigan's long-running consumer sentiment survey dropped for the fourth straight month in March, with the steepest declines seen in what Americans — including Republicans — expect for the future.
• Two-thirds now expect unemployment to rise over the next year, the highest share since the annus horribilis of 2009.
• At the same time, the average expectation for inflation over the next year surged to 5%, from 4.3%.

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Fast heading into recession which will blow out deficits even further.

Don't forget that the Hedge Funds have a massively leveraged 'basis trade' on. If they are forced out who picks up the fallout? Something to think about if we start to see a real stock and bond market panic.

jog on

duc